Transferring life insurance policies to a new partnership

Article Abstract:

The IRS issued a letter ruling allowing closely held corporations to create a partnership to hold life insurance policies on the main shareholders for buy-sell agreements. While this allows the corporation to avoid alternative minimum tax and IRC section 101(a)(2) transfer-for-value rules, it may subject the proceeds to estate tax at a possible rate of 55%. Estate tax is triggered under section 2042 if the covered person has any incidents of ownership in the partnership. Therefore, the ruling opens a potentially beneficial planning opportunity but it needs to be fully explored.

Laws, regulations and rules, Transfer taxes, Insurance policies

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Guidelines for choosing the most favorable entity

Article Abstract:

The choice of entity for holding a business of property for estate planning purposes should focus on the use of limited liability companies, limited partnerships and corporations. All of these choices of entity provide some limitation of liability. Planning should be done based on the need for valuation discounts, income expected to be generated and administrative expenses. S corporations, limited partnerships and limited liability companies provide pass-through income taxation.

Analysis, Limited liability companies, Estate planning

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Realistic discounts for undivided interests in real property

Article Abstract:

The authors provide an overview of the process of establishing the fundamental valuation of undivided interests in real estate partnership arrangements. Basic value-influencing elements are covered and reasons for discounting undivided interests as investments are provided.

United States, Valuation, Real property, Real estate appraisal

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